 Good morning to everyone. It is Wednesday the 6th of November. I hope you're doing well. I'm going to talk over the ongoing US-China trade war is the main focus for the briefing this morning. We're also going to have a look at the expectations around what the Fed are going to do in December and how that's been evolving. Also some commentary out of Fed's cap plan overnight and looking at the inversion of the yield curve. We've also had some German data and then we'll look at the calendar ahead and wrap up my kind of half of the brief and then I'll hand you over to Sam. So back to back to normal now and then he'll look at the technical levels and some of the setups across the different charts. Kicking off those we always do with the overall sentiment for this morning and it's a pretty quiet open overall. In the currency markets I mean the dollar index is trading pretty flat overall. Currently down one tenth so major currency pairs in the top left euro dollar and cable. Pretty sideways action thus far in terms of since the close of Wall Street last night in the Asia-Pacific session. Pivot level just providing a bit of near-term resistance in the cable futures at the moment. Equity-wise again equally so pretty tame open for European indices for the moment. The US similarly quite flat as to is the US 10-year oil. Slight loss at the moment trading sub its pivot and the $57 handle. $56.93 not too much in the way of any new fundamental headlines there driving price. So we're going to delve straight into the main kind of topic and get things underway. So talking about this US-China trade negotiation that's been ongoing and trying to finalize this idea of phase one at least of looking to do various different things and to start with I thought I would go over a few key points that summarize I think the current state of play and of which when I go through I think you'll see that there's plenty of support of to follow the notion that I think that it's going to be incredibly difficult I still see for this deal to get done to the point of which I think the market given how it's now positioned will be satisfied what I mean is I think there's room for a significant disappointment if history repeats itself and the whole dialogue becomes undone at the last minute which I think given the points are going to run through there's a fairly high prospect of that happening. So starting off and want to talk about what the Chinese want kind of know what the US want what did the Chinese want and a comment came out yesterday in a report from their state media talking about people familiar with the deliberations saying that Beijing has asked the Trump administration to pledge not only to withdraw threats of new tariffs so withdrawing new tariffs remember their duty commence in December they've also asked to eliminate duties on about 110 billion dollars of goods imposed in September and negotiators are also asking to lowering the 25 percent duty on the 250 billion dollars that Trump imposed last year so they want no implementation of December they want the rollback of what happened in September and they want the rollback or lowering at least of the duties on the on the quarter trillion dollars worth that was imposed in 2018 they are saying that the reason why they're asking for so much is because if you want China to continue buying large quantities of agricultural goods and in most importantly the issue that hasn't been tackled but you want us to play ball on cracking down on intellectual property theft well then that's the cost as far as the US consent now big problem if you're America because obviously tariffs or as he's become known the tariff man now which is Donald Trump this has been his primary weapon in this ongoing negotiation so if he now is to start not implementing or in fact rolling back and lowering of previous tariffs I think ultimately this is too big a reversal for the tactics that's being deployed thus far for a start now obviously there are stresses on both sides of each economy at the moment we saw that evident in the US trade data yesterday on Tuesday for September it showed tariffs have hit both US imports from China fell 4.9 percent from the prior month to the lowest in more than three years US exports to China dropped 10 percent to a five-month low as well so you could argue there's that there's some will to get a deal done given the consequence on the economy but remember for me there's a much bigger narrative at play and this is about Trump and the election this is all part this deal not so much I think him so full focus thinking about its implications on the economy it's more about popularity and getting the job done in order to secure a second term now this does come with some political risks then because by agreeing to lift the duties that could backfire because obviously this has been the staple of his policy ever since the pre-campan campaigning period that we had in 2016 when it was all focused on the US getting a bad deal China manipulating their currency and all these different types of things and so I think by agreeing to lift the tariffs again I think it's too bigger a step down from that narrative into what is and will remain a real staple linchpin of his campaigning going forward over the next kind of 12 18 months or 12 months I should say November obviously actually is the US elections on the 6th or the 8th next year it's pretty much a year to date as far as where we are at the moment the other thing was there's been a bit of talk about where could this be this actual talk of given the APEC meeting was cancelled because of the civil unrest in Chile and the last few weeks the South China Morning Post reported this morning that Xi Jinping's Brazil trip may be too soon for China to sign a partial US trade deal this is quite key then because Beijing has not agreed to a stopover in the US on way to the summit according to a source with details of agreement not yet finalized the removal of US tariffs remains the sticking point on the Chinese side so again it might be that we don't even get to the definitive nature of finding out where they're going to go to sign this deal because it might all come undone even before then but for me where the deal is going to be signed is quite symbolic particularly on the political front now Beijing saying that Brazil trip is too soon one of the areas that has been tabled although it's been pushed back by the Chinese is signing the deal somewhere in the US now interestingly one of the areas which has been put on the table is Iowa now Iowa for me is particularly interesting as a short list or being a candidate on the short list of potential locations so this is a look at the office of the United States Trade Representative if you were to go on their website you can see basically definitive detail about fact sheets on different areas and locations within the US now Iowa is particularly interesting because it's the second largest exporter of agricultural products in the entire United States of America and so this is particularly important why because well if you go back to 2016 when we had the previous US election Donald Trump won this area with 51.1 percent of the vote Hillary Clinton received 41.7 percent of the vote Trump carried Iowa by the largest margin of victory of any Republican candidate since Ronald Reagan in 1980 Trump enjoyed the support of working class whites in the agricultural industry of course and and what's the main product that they produce in Iowa soybeans and of course we know the back history of that and what the the ongoing tensions have been and tariffs and purchasing of goods between the US and China so I just find it incredibly difficult then for Trump to meet the conditions of what China want in order to get this deal done from the political point of pandering too much to the Americans but also making that concession if it were to be in an area like Iowa which is that whole understanding of protecting American farmers and so on it completely goes against that so that in addition as well to the fact that you know tariffs are seen as such an important enforcement tool think about this as well one of the main things that the US has wanted and particularly Robert Lighthizer the trade secretary has said before is that we cannot remove the tariffs because we really don't trust the Chinese are going to follow through with their commitments on various different things by keeping you know keeping the weapon on the table if you like that helps keep China honest that they'll follow through and see and implement then parts of their side of the deal all of this being said then whether it's the rolling back and meeting China on its tariffs whether it's the political risks that I think are too severe for the US to meet China on their request the loss of enforcement and the leverage the fact there's well the equities are all-time highs which we know Trump then tends to become a little bit more assertive with the rhetoric because he almost feels like he he feels like there's a bit of room for maneuver in order that the equity market can come back a little bit and that would be okay given how elevated they are at the moment so he might feel a bit more relaxed on that front you've also had US economic data whether it's non-farm payrolls on the consumer side in the non non-manufacturing ISM yesterday which was improving new orders are up employment constituent improving from the prior month does this give Trump them a little bit of support or put his mind at ease that really well he can't meet them in the middle not at least at this point and therefore do these talks all come undone I think it would be probably in my mind if I was an advisor to Trump I'd want to push this out a little more towards the middle of December when those December tariffs are going to kick in I wouldn't want to be signing any deal right now because I'd want to keep the the pressure on China China talking up a bit of a big game at the moment I'd want to test that take it down to the 11th hour as normal part of the negotiation process so that being said I think the markets are overtly confident about the outcome of this and if the trade deals do start to break down then I would anticipate some sudden pressure to come in to the equity market and that to initiate a degree of some risk off trade now with that being said then a couple of other things to have a look at obviously a lot of people looking at this equity market now having touched record all-time highs thinking well we're at these levels are we entering overbought territory and just having a look here on this chart from Bloomberg you've got the MSCI All Country World Index which isn't quite at the peak that we saw at the beginning and around Jan Feb of 2018 before we saw that correction global market but the 14-day RSI Bloomberg are looking at is more overbought than it has been at any point since we had that big sell-off at the beginning of 2018 you'll remember this elevation here when equities are really rallying one in a one-dimensional kind of move was when the corporate tax cuts got underway and that was in end of 2017 into 2018 when we hit that original all-time high so I've also read in this morning a lot of people talking about the put-call ratio is incredibly high at the moment all these things indicative that people are at some point positioning themselves for potential downturn in the equity market and I do think that this trade war will come undone and that could be then the catalyst then that creates then quite a severe correction as per what we've seen of course on many times gone by remember if we put the S&P back onto a daily continuation chart if you give me one moment I'll bring it up so we can have a look let me just quickly remove some of these studies just to make the chart a bit clearer our transition so this of course tells a you know a very big story of of many different fundamental catalysts this was when the corporate tax cuts came in the market was kind of overheating almost with its forecast and Fed tightening policy risks started to come in and we saw a big pullback we then had the biggest pullback of all which was this time last year we're in the midst of that selloff because the Fed was still tightening or signaling to do so the escalation in the trade war the risk of a no-deal Brexit political populism across Europe multitude of different things then we had the recovery and then the Fed started to cut rates and we started to see the episodes then fed cut market fall fed cut September market fall and now we've got to where we are at the moment of course at these all-time highs so I do think there's some downside that will definitely come I guess the the the clearest near-term target here would be a reversal back down I'm talking more medium-term if this trade deal does come undone that 30 23 24 error in the futures market would put us back to that previous double top that we had to define the price action at 2019 that would be the first place any further more meaningful pullback then I guess you've got to be looking at then those previous areas from May of 2019 and the top of around the late 2018 price action but I'll leave Sam to go into that I mean that's definitely much more longer term rather than the intraday environment so yeah that's my latest kind of take on the the US trade situation with China I just think it's a just a matter of time really but I think you've got to be a bit more responsive now to headlines as they come out because now things like the general election for the UK an interesting conversation I had one the guys on Monday was that you know we went through a period of many months looking at cable and it was really whipsaw price action a lot of hearsay and rumors driving the price whereas really now I think cable is pretty boring and what that does mean is I think we do get a bit of a reversion back to perhaps a little bit of a look at the economic data if anything of substance comes out the Bank of England I think it's largely a bit of a non-event tomorrow but overall I think really it's unless there's a major campaigning error on behalf of predominantly Boris Johnson then I think it's all pretty quiet till we get up to that election date on December 12th so I do think then that means that the macro hierarchy of key influencing themes has changed a little bit the composition Brexit's dropped off and I think trade war is right back up there at the top where do we stand at the moment in terms of the market's expectations on the Fed side of things well this kind of reflects that notion that I think if the trade deal did blow up that there could be a decent move in reaction because at the moment going off the language adopted by the FOMC in the most recent meeting where Powell was kind of signaling that this is the end of the recent rate cutting cycle expectations are very much that rates will remain where they are when the Fed next meet on the 11th of December I remember 11th the day before that election takes place the expectation here is for 94.8% so only 5% of the market's pricing in one more cut now what does that mean well Fed's cat plan he did speak last night yesterday evening late in the US session he said a steeper yield curve a sign that Fed rates are now appropriate and two things one who is cat plan so for those who need the refresher here's the hawk dove kind of crib sheet of the FOMC cat plan is a non-voting member but is a leaning dove so it does make that commentary quite interesting on two twofold one not only is he more neutral to dovish stance and typically that's slightly more of a hawkish comment but cat plan is going to be a voter as of the calendar commencement of 2020 so what typically happens is we get closer towards the end of that year and we get the rotation of the regional presidents cat plan will be a voter and so what he says now can be important for factoring in even though he doesn't have a voting right in the December meeting the other thing is you remember a couple of months ago everyone was getting almost obsessed with the inversion of the yield curve particularly with the calendar timing of the fact that equities were almost peaking as we were going into the beginning of October and on a year to year basis the beginning of October with this inversion of the yield curve kind of obsession that the market had meant that people were thinking well maybe we get a repeat of what we had in Q4 of 2018 and they couldn't be more wrong anyone who was calling for that and I know Bloomberg are really pumping that at the time but me and Sam remember in the briefings we were we were very much of the opinion that the the inversion of the yield curve was massively overhyped and thankfully for our call it's proven to be true because that 210 spread now the yield curve is back at levels lasting in July as yields continue to reflect the notion that you know that was very much overdone in terms of its initial pricing as the economy as per some of the data points that we've had and as per now the Fed pricing on the right cycle side has kind of eased back into more of a neutral stance and the yields are reflecting that environment. Final bit of news I just wanted to touch upon and I hand you over to Sam was we had German factory orders this morning possibly as helps a little bit of the risk appetite this morning as I've been delivering the briefing just a little edge higher in some of the global stock futures the DAX managing to get its head back above the pivot in the futures market and Germany's industrial orders rose by 1.3 percent month-on-month in September above expectations which were the 0.1 percent now this particularly important because the German economy of course has been under quite substantial stress of late and this was a substantial beat within that reading albeit it does tend to be a fairly volatile data set it was the first month of the increase in factory orders for Germany though importantly since June and boosted by a rise in both domestic and foreign orders so it's likely to alleviate at least near term any of that concern that was amounting for that particular country. Okay quick look at the calendar what else is there to come then for the session well this morning you do get the final readings of the various PMI numbers on the service side but remember these are final readings so are unlikely to have much in a way of substantial market reaction. Elsewhere eurozone retail sales non-event I'm not quite sure why this is bolded I've never in my life seen eurozone retail sales move markets and so I would not really factor that in if you're looking at any euro related trade strategies for this morning so then that takes us into the US session pretty light actually labor costs productivity numbers coming out for Q3 in the US and then you've got the oil infantry numbers so what I'll do is I'll post the API's from last night into the chat and then while Sam's going over the oil chart he can bring up to speed with what was the numbers from last night. Speakers quite a few to look out for a variety of ECB and Fed ECB in the morning Fed in the afternoon one of the most interesting on the Fed side would be Feds Williams who is a current voter speaking at the Wall Street Open 230 London and then Feds Harker who will be a voter next year is speaking towards the closing Wall Street and for any fixed income traders you've got a 27 billion 10-year note auction coming out of the US Treasury later. Other than that I would say I'd definitely keep an ear out for any developments and rumors about what the latest is in regards to the ongoing US-China trade talks. As I said I do feel that that is one of the major risks now that could well turn around this market having traded at all time record highs particularly in the equity space right with that I'll leave it to Sam now to finish things off and I'll see you in the chat room. Thanks very much. Hi guys good morning we're all good just having a quick look over stocks actually to begin with and bringing the DAX along with the FTSE actually starting in the morning quite nicely just pushing half hour into the open here and we have gone above yesterday's highs and we're keeping a watch on pretty much where we're trading now if we can confirm a break above there or not you can see was the high from both Monday and Tuesday yesterday so having an attempt to get in above there and of course if we put this on that longer chart you can see this is the highest the DAX has been for a very long time so keep a watch on that we're almost into with the last few sessions a bit of a mini range as well you can see again early hours in the Asian session we came down to test yesterday's low which was the overnight low from Monday as well so key point to keep a watch on there to see whether we can hold or not above if we were to drift lower of course just be aware that you are coming back then into the middle of the range again so a couple of potentially key levels with the way we've been trading this morning quite well respected trend line here in the DAX and you can see one two three four tests of that so it might be worth later on to see if we do drift lower how that reacts as well the pivot has already acted as a good level of support once broken through but if we were to come back down again it could well get choppy but the moment the DAX enjoying life and so is euro stocks and that's helping to drag the S&P up towards its pivot you can see similar move obviously not as not as big however as as european stocks as well key level to the upside 30 78 a bit of a breakdown area from yesterday post cash open and also the evening high as well so just the three points above where we're trading currently looking again longer term at this market and we haven't quite had a test back of what was the post let's you know it's not the 30th of october that would be 30 54 which is of course not too far away from where that trend channel was so still something to keep a watch on that if we were to have a couple of down days and see how that holds out as a good line in the sand for for the buyers and sellers to to fight over so let's just put that on and and see where that would come in for now just remove the pivots bring in the trend we one sec you can see here it's going out a bit lower town you can see that yeah coming in around sort of 30 60 or so as well which is also not far away from the high that we had on the first so still one to keep an eye on there's a couple of nice levels as well in the euro which i would have as lines in the sand as well and it's going to bring in here on a 60 minute chart just looking at the the previous high that we had on the 21st you can see we created this nice trend that from the 24th we then broke through in the 30th came back to find support in the 5th which was of course yesterday before that break down and that's certainly somewhere i would have marked up on any push back towards there you can see yes it looks now mid-range but certainly being well respected over previous times the low that we had yesterday could argue a decent enough area from the 16th or that was quite choppy we're just trying to push above those previous lows that we had on the 25th and 29th we are above that on the stock on the the spot market so just be slightly careful of getting in too aggressively yes we've got the hurdle now we've just attacked here on the 30th so that somewhere i would still be looking at for a point of resistance but the key line in the sand i would have as that trend line there moving on to the pound it is boring i have to say at the moment waiting for opportunities to to get in and it's not really delivering as of yet from a technical point of view let's have a look see if this trend line hasn't come into play just yet which would be just above 129 the highest from yesterday evening this is looking on 60 minutes so quite a bit of resistance around there that i would be focusing on to be fair and then maybe from the lows to see if we can get anything squeezed in as well but yeah i think opportunity wise there's better ones out there the pound at the moment probably not where my focus is going to be until we get some further developments and that course could happen from today onwards but for now i'd be looking elsewhere main move up yesterday gold decent push to the downside a couple of trend lines broke loads of the week and last back end of last week broke as well 1504 key level nice breakdown and we came down to test some of the lows that we had from the back end of last month which you can see just looking at this whole area is such a key zone and gold is a market where it still doesn't know where it wants to do what it wants to do shall we say but at the moment if we can have a strong dollar and positive trade talks it does have to reprice this is whether that can last or not i think will be the term in fact but there's a line in the sand where it could potentially get a slightly bit more ugly 1480 the lows that we had back on the 11th are going to be key because a break below there while you've got some possible levels 1476 that low that we had from the first of last month would be an area to keep a watch on with gold the way it can move after in a strong day to the downside don't necessarily getting get too aggressive looking for those shorts we've come a long way so there could well be a slight retracement in the mix as well pivot looks to me like it could be a quite a nice area 1492 that famous 1492 level decent little breakdown area from there also the pivot and not a bad place perhaps to get the continuation down from there might as well get a fib on that level as well oil just to wrap it you can see we had a bit of a build last night from the chat 4.6 mil cushing and also build gasoline however decent draw and distillates to there's that 930 candle hardly anything hardly anything off that and a quiet day has to be said for oil yes say however just where we're trading now quite a nice level previous high of yesterday before we pushed higher similar time to where we are now so expect a reaction point around here if that was to break through then those lows from yesterday would be the next key level to target and also we've come with a couple of these markets where we have made recent highs worth us having on these potential trend lines and you can see actually we're in the 15 minute now we've got quite a good test of that one two and almost that third there so definitely something to have on that for oil as well any questions as usual please do let us know quick run through that calendar again as I'm saying those retail sales numbers unlikely to move things some data coming out shortly which we know is always one to keep an eye on for the euro remember that line in the sand a couple of us numbers later before oil but this week in general looking to be relatively quiet so I wouldn't be looking to to trade too much let the market come to you would be my advice today hope you have a good trading day and I'll catch you all in the chat